Sony announced third quarter results

Sales were 2,206.2 billion yen (27,238 million U.S. dollars), a decrease of 1.4% compared to the same quarter of the previous fiscal year (“year-on-year”), primarily due to unfavorable foreign exchange rates. In all segments excluding the CPD and Financial Services segments, sales declined year-on-year. During the quarter ended December 31, 2010, average foreign exchange rates were 81.6 yen against the U.S. dollar and 110.7 yen against the euro, an 8.7% and 18.5% yen appreciation compared to the previous year’s third quarter, respectively. On a local currency basis, sales increased 6% year-on-year.

Operating income decreased 8.6 billion yen year-on-year to 137.5 billion yen (1,698 million U.S. dollars), primarily due to unfavorable foreign exchange rates. Operating income in the NPS segment increased significantly due to the contribution of the game business, while operating income decreased in most other segments, particularly the CPD segment which was negatively affected mainly due to LCD televisions. Excluding equity in net income (loss) of affiliated companies and restructuring charges, operating income on an as adjusted basis decreased by 14.6 billion yen to 150.9 billion yen (1,864 million U.S. dollars) year-on-year.

Equity in net income of affiliated companies, recorded within operating income, was 2.6 billion yen (32 millionn U.S. dollars) compared to a loss of 5.9 billion yen in the same quarter of the previous fiscal year. During the current quarter, Sony recorded equity in net income for Sony Ericsson of 0.4 billion yen (5 million U.S. dollars) compared to equity in net loss of 10.2 billion yen in the same quarter of the previous fiscal year. Equity in net income for S-LCD was 2.1 billion yen (27 million U.S. dollars), a decrease of 0.8 billion yen year-on-year. The net effect of other income and expenses was an expense of 6.0 billion yen (74 million U.S. dollars), an improvement of 16.3 billion yen year-on-year, primarily due to a smaller net foreign exchange loss.

Income before income taxes increased 7.7 billion yen year-on-year to 131.5 billion yen (1,624 million U.S. dollars). This was mainly due to the improvement in the above-mentioned net effect of other income and expenses.

During the current quarter, Sony recorded 47.6 billion yen (588 million U.S. dollars) of income taxes, resulting in an effective tax rate of 36.2%. In the same quarter of the previous fiscal year the effective tax rate was 26.8%. The effective tax rates of the current quarter and the same quarter of the previous fiscal year were lower than the Japanese statutory tax rate primarily as a result of profits at non-Japanese subsidiaries subject to lower tax rates, the impact of which was more significant in the same quarter of the previous fiscal year. Net income attributable to Sony Corporation’s stockholders, which excludes net income attributable to noncontrolling interests, decreased 6.8 billion yen year-on-year to 72.3 billion yen (893 million U.S. dollars).